G20 Setting an Agenda for Growth

The G20 [Leaders’ Summit](https://www.g20.org/australia_2014/leaders_summit) was held on 15 and 16 November in Brisbane, Queensland. Australian Prime Minister Tony Abbott hailed the G20 summit as a *”weekend of achievement”*. He said under Australia’s leadership, the G20 had set forth *”bold plans”* but crucially *”strong execution”*. “*I believe that the G20 this weekend has shifted a gear from responding to events to setting an agenda for growth,”* he said.

World leaders pledged to lift their combined economic growth by 2.1 per cent – a measure the International Monetary Fund and OECD said would add more than US$2 trillion and “millions of jobs” to the global economy. International Monetary Fund managing director Christine Lagarde said the body would monitor the leaders’ commitments to growth. In an effort to increase infrastructure investment, the G20 plans to launch a global infrastructure initiative to address the $70 trillion gap in infrastructure needed by 2030. A Global Infrastructure Hub would be based in Sydney.

G20 leaders have recommitted to a new standard that would require multinationals to give governments detailed information about their tax affairs. More than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard by 2017 or 2018. Australia will have its systems in place by 2018, which will involve banks and other financial institutions setting up systems that will allow it to automatically feed information to government agencies. Prime Minister Tony Abbott declared the plan would *”leave no place for tax cheats to hide”*.

The OECD is working on the two-year Base Erosion and Profit Shifting Action Plan, with 15 separate parts, to address tax avoidance by multinationals.

The [Summit Communiqué](https://www.g20.org/sites/default/files/g20_resources/library/brisbane_g20_leaders_summit_communique.pdf) said that *”profits should be taxed where economic activities deriving the profits are performed and where value is created”*. To allow this, the OECD is working to change the definition of “permanent establishment”, which in the old rules rested on companies having a physical presence. In the modern digital economy this has allowed companies to avoid tax by claiming most of their activity occurs in low-tax countries

The OECD estimates that information exchange arrangements have already yielded $53 billion dollars of revenue in about 20 OECD and G20 countries through increased voluntary disclosures by taxpayers.